Governance fit for the future: why the AAT Council is changing for good

Kevin Bragg MAAT, AAT President

As your president, I chair AAT Council – the group of trustees entrusted to oversee our organisation in the public interest and safeguard it for the next generation of AAT members.

As a group, Council has been considering changes to AAT’s governance structure.

We believe there are changes that can be made to AAT’s governance arrangements now that will improve decision-making into the future, as well as ensuring AAT’s consistency with the good practice contained in the updated Charity Governance Code.

I want to explain to you what these changes mean, why we think they are needed, and how you can have a say – both on the proposals and an ongoing basis.

However, before I do that, I do wish to underscore that these are proposed changes. They are not a fait accompli. 

Whilst I sincerely hope you share my open mindedness to the benefit that the new structure can bring to improve decision-making whilst protecting the members’ voice, ultimately the fate of these proposals rests with the AAT Annual General Meeting (AGM) which is to be held on 25 October at 30 Churchill Place, Canary Wharf. That is the forum where every member has an equal vote and an equal say on the amendments Council will be tabling to the Articles of Association.

Improving decision-making to drive performance 

As someone passionate about motorsport and all things high performance, there’s a truism that I have come to hold true, both on and off the track: if you want to go far – or you want go fast, then you’ve got to go look under the hood.

Maximising performance – whether for a vehicle or a £30m organisation – requires more than doing the bare minimum maintenance. It’s about asking ‘could things be better?’. It’s about opening up the bonnet regularly, actively repairing or replacing those parts which are proving a drag compared to new or better-suited models available. It’s about making incremental changes, so that you can meet the variable conditions you encounter with speed, safety and stability.

With a clear destination marked out in our recently-adopted 2030 Strategy: Securing future relevance, as well as the regulatory nudge provided by an updated Charities Governance Code, conditions have changed – and they’ve done so against the backdrop of a fast-changing world.

It has been the right time, therefore, in recent months for Council to look ‘under the hood’ of our existing governance model and consider if an alternative approach would drive us more effectively toward our destination. This means things like whether a structure supports (or detracts from) decisions that are effective, timely, considered, informed, evidenced, unconflicted and well-reasoned.

I am pleased to say that Council members took the job of assessing various models and their relative strengths and weaknesses seriously. At Council’s May meeting it was obvious that trustees had given the question careful consideration.

Ensuring compliance

As a leading professional body and one of the strongest voices for responsible business in accountancy and finance, AAT has an obligation to meet, exceed and then champion, best practice where it is clearly available. We support industry standards, and raising up our members and those unaffiliated in our sectors when they fall short of such standards.

Therefore, we must practice what we preach when it comes to implementing good practice in our own governance arrangements.

The Charity Governance Code is UK’s most widely recognised set of guidance for organisations of our kind. It was developed with the input of the Charities Commission of England and Wales, along with several charity umbrella groups.

The Code was updated in 2020, and with it came significant ramifications for large charities wishing to model best practice, such as AAT.

Unfortunate timing, however, prevented AAT’s most recent governance review from benefiting from this new guidance. Nevertheless, the 2016-18 period did mark important changes that saw AAT’s governance heading in the right direction.

We can trace today’s Council taking shape with these reforms: a 20 person Council; some trustees elected by members – others appointed as independents; a professionally-focused Members’ Assembly; and AAT’s long-desired emancipation from the chartered bodies which sponsored AAT’s establishment in 1980, removing the chartered reps and their ex officio seats on our Council.

But we can’t afford to rest on our laurels. To stand still is to fall behind. 

We should be leading by modelling good practice ourselves: in good governance, in responsible business, and in upholding industry-wide standards.

For as long as we fail to meet industry benchmarks like those contained in the Charity Governance Code, AAT will continue to miss an opportunity to live our values.

With governance fit for the future: we can lead.

A new, streamlined trustee board

The Council have proposed to create a new, streamlined governing body to be called the ‘AAT Board’, which will work with a reconfigured ‘AAT Members’ Council’. In line with the good practice advised in the Code for large charities such as AAT, the proposed board’s size would be much smaller than the current Council. Instead of 20 decision-makers, the new board would have “at least five but no more than twelve trustees” to be Code consistent. 

The AAT Board will be tasked with ensuring decisions are taken so that AAT can achieve our charitable purpose and meet our strategic goals. The individuals appointed to this body will be the ‘Trustees’ and they will assume a range fiduciary duties and statutory obligations, being responsible for the compliance of the organisation and oversight of its agents. 

The board will ultimately oversee AAT’s £30m annual turnover, scrutinising operational performance. To do so as effectively and to ensure further compliance with the Code; its appointments processes will be designed to produce a balanced board replete with a ‘mix of skills, knowledge and experience’. The expanded variety of perspectives and new depth of competencies brought to bear by the changes will maximise the value AAT gets from this body, as well as ensuring the right questions are asked.

I can tell you from experience that our Council has been very strong historically at reviewing the accounts and probing management’s budget assumptions (as you’d expect from a group of accountants!). But by having only the accountant perspective represented at the table, I have often wondered: what are we missing here? How do other industries, cultures, generations go about this or that matter? We will build in diversity and inclusion into our recruitment processes. They will be open and transparent, with all AAT members able to put their names forward to be considered alongside external candidates who are committed to AAT’s cause.

The evidence shows that a more diverse governing board is likely to strengthen robust decision-making and help prevent blind spots developing. As the most diverse accountancy body membership in the UK, we owe it to our members and society to have a diverse, effective board in the driver’s seat.

Protecting the membership voice through a new AAT Members’ Council

Trustees have also been reflecting on how best to ensure an effective, representative voice for AAT members and our communities. To this effect, consideration has been given to redefining the name, purpose and responsibilities of the current AAT Council to become a new ‘AAT Members’ Council’.

A key caveat of Council’s decision to go forward with the proposed model and its elevated board, is that there are aspects of its design detail which reflect a need to recognise, respect and protect AAT’s status as a membership body. Similarly, in any new configuration there must be a formal connection retained between the new board and the voice and influence of the AAT membership. To many of us, it makes sense for that connection to be manifested via the AAT Members’ Council and the democratic will of members that the body can and will continue to represent.

Council has made clear our shared view that the role of President and Vice President should be retained the new governing body as ex-officio positions by virtue of their roles within the AAT Members’ Council. There are no changes mooted at this stage to amend the election process for AAT president and vice president, the latter of which is elected by Council peers and sees that person serve an effective apprenticeship in support of the current president whom they take over from at the time of the following AGM.

In practice, it is likely that existing AAT trustees would shift across to this new body but with a mandate more focused on being a voice for the membership. There will be a formal connection in place linking the AAT Members Council and the Trustee Board, ensuring the ongoing voice and influence of the AAT membership at the decision-making table.

Under the proposals, how AAT members nominate, run for, and are elected to, the new AAT Members’ Council would remain largely unchanged from as it is now. Similarly, the method and timing for electing the AAT President, Vice President and Past President roles will be unaffected.

Suspension of elections

Council deemed it both necessary and appropriate to suspend elections for the Council in its current form for a period of up to 12 months from October 2024. It is expected that elections will take place before the 2025 AGM. 

I appreciate that this news of which will cause some disappointment, particularly for those members who have been contemplating standing in our annual elections.

The reason behind deferring these elections until the new structure is determined in detail, is not untoward or sinister in any way. Plainly, it is because the members – you -  deserve to have a say on this at our highest decision-making forum, our AGM, prior to any electioneering taking place. 

It also would be unfair to those who may have been interested in putting up their hands for election this year, for AAT to be unclear on the nature of their role, its authority, and its duties.

Such details are to be worked through in coming months, but please rest assured that proposed amendments to our Articles of Association will be circulated in the proper way. Information will be accessible for members to consider ahead of the 25 October AGM later this year. It will be an important day for AAT’s future – one we are swiftly speeding towards. A day for good.